Donald Trump today called attention to the Kamala Harris vow to hike the U.S. corporate income tax rate to 28%, a steep 33% increase from the current rate of 21%.
The burden of a corporate tax increase hits workers in the form of lower wages, hits households in the form of higher prices, and hits retirees in the form of reduced nest egg values.
Trump said:
“She’s called the Tax Queen. They love her in other countries because she forces everybody out of our country into their hands. The Tax Queen is demanding a 33% tax hike on all domestic production. You can hate companies and all that, but they still – they fuel growth and they fuel jobs and they fuel everything.
You tell these companies, they don’t care. They will just as soon be in Europe, they don’t care. They want to go best price it’s called, best deal, and they are going leave our country in droves if she does that [raises the corporate rate by 33%].”
The Kamala Harris corporate tax rate hike will make the U.S. uncompetitive
The Harris federal 28% rate is higher than the Asia average corporate tax rate of 19.8%, the EU average of 21%, the world average of 23.5%, and the OECD average of 23.7%. (See the Tax Foundation’s comprehensive listing here.)
The Harris federal 28% rate is also higher than Canada (26.2%), the UK (25%) Sweden (20.6%), and even Russia (20%), Afghanistan (20%), and Iraq (15%).
After adding state corporate income taxes, the combined federal-state tax burden in most states will easily exceed 30% under the Harris plan.
The Harris rate hurts the USA vs. China with its 25% rate. And note: Industry sectors of strategic use to the Chinese government pay an even lower rate of 15%.
American workers will bear the brunt of Harris’ corporate tax increase.
The non-partisan Joint Committee on Taxation affirmed in congressional testimony that corporate tax rate hikes hit “labor, laborers.”
Testifying before the House Ways & Means Committee, JCT Chief of Staff Thomas A. Barthold said:
“Literature suggests that 25% of the burden of the corporate tax may be borne by labor in terms of diminished wage growth.”
According to Stephen Entin of the Tax Foundation, workers bear an estimated 70 percent of the corporate income tax. He wrote in 2017:
“Over the last few decades, economists have used empirical studies to estimate the degree to which the corporate tax falls on labor and capital, in part by noting an inverse correlation between corporate taxes and wages and employment. These studies appear to show that labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome.”
A 2012 Harvard Business Review piece by Mihir A. Desai notes that raising the corporate tax lands “straight on the back” of the American worker and will see a decline in real wages.
A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003.
Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor.
Higher Corporate Tax Rate = Higher Utility Bills
The Kamala Harris corporate tax rate increase will directly raise the cost of utility bills.
Customers bear the cost of corporate income taxes imposed on utility companies.
Electric, gas, and water companies subject to the corporate income tax have their billing rates set by the 50 state utility commissions. The commissions are required to build the cost of taxes into the utility rates. Documentation of this concept can be found is this Americans for Tax Reform compilation.
Harris seeks to impose a lengthy list of tax increases, detailed here.
Stay tuned for updates at ATR’s special website, Kamalanomics.org
The post Trump Rips “Tax Queen” Kamala Harris Plan to Hike Corporate Tax Rate by 33% appeared first on Americans for Tax Reform.
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Author: John Kartch
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